INTERCOMPANY SALE TRANSACTIONS

Problem IV.
P Company acquired 70% interest in S Company for P2,600,000 when S Company’s stockholders’ equity consisted of
Capital Stock – P3,000,000; and Retained Earnings – P500,000.
P Company opted to measure NCI proportionately. P Co. and S Co. reported the following for the year ended December
31, 2020:
P Company S Company
Sales P6,000,000 P3,000,000
Cost of Sales 3,900,000 1,980,000
Net Income 900,000 400,000
Dividends 200,000 120,000
During the year, P Company sold merchandise costing P104,000 to S Company at the same gross profit used by P
Company to all sales. S Sold 75% of this shipment during the year.
Compute for the following:
1. Consolidated Sales and Cost of Sales
2. Net Income Attributable to Parent
3. NCINAS

Problem V.
In year 1, P Company sold inventory costing P100,000 to its 80% subsidiary, S Company for P140,000. A portion of this
was sold by S Co. in year 1 for P130,000. Other information available at the end of year is as follows:
P Company S Company
Sales P3,500,000 P1,800,000
Cost of Sales 2,100,000 1,170,000
Net Income 150,000 80,000
Dividends 100,000 100,000
Inventory:
From outsider 80,000 40,000
From P Co. 42,000
Compute for the following:
1. Consolidated Inventory
2. Consolidated Sales and Cost of Sales
3. Net Income Attributable to Parent and NCINIS

Problem VI.
On June 1, 2020, P Company acquired 70% of the outstanding shares of S Co.at an amount which is less than P200,000
less than the book value of interest acquired. On this date, the net assets of S Co. is P1,800,000. During 2020, P Co.
purchased merchandise from S Co. who also purchased merchandise from P Co. Selected data were available:
P Company S Company
Sales, including: P4,800,000 P2,240,000
Sales of P to S – P600,000
Sales of S to P – P200,000
Intercompany inventories, end 37,500 50,000
Inventories from other sources 180,000 120,000
Dividend Income 35,000 100,000
P Co. and S Co. used the same rate of markup on cost: 25% for intercompany sales and 40% for other sales. At year
end, the net assets of S Co. is P1,900,000.
1. Compute for the NCINIS.